Healthcare Practice Managers are always in need of good advice. For that matter, any manager is in need of good advice. Over many years of practice management and being in the healthcare industry, I have had several experiences that have taught me something. Maybe not always at the time of the experience. As they say, hind sight is always 20/20.
Several years ago, some of us visited what was touted as “the” healthcare business office. The cosmetics of the facility were striking. It was all glass and steel. There were cubicles but we didn’t see that many people. There were no personal effects in the cubicles, no stacks of paper, no pictures of kids and family. It seemed, to us, to be sterile. Then we were shown an example of a monthly report and their statistics. AR (Accounts Receivables) were less than 10. This was not a mis-print. They were touting AR days of less than 10. Well, all we could do was laugh. In what way did they manipulate the numbers to get 10? If a practice was an all cash practice, I could see less than 10. But if there was any MCR, MCD or even contractual insurance, if they included secondary, it simply could not be 10 or less.
Accounts Receivable Days, or AR days, is the average number of days it takes to get paid for a (the) claim. There are a number of ways to look at AR days. But what is the real value of AR days? It is not to tout the lowest number you can possibly stretch to wow others at MGMA.
AR days should be an internal tool by which you can judge how your AR is performing. Along with how many dollars of AR are greater than 120 days, the health of an AR is readily appreciated. Of course there are many details that go into the typical healthcare practice business office, but AR days and percent of claims over 120 days is a pretty good indicator of AR.
The total days, the various financial classes or insurance groupings or however you divide up your AR, are important. The total AR days gives you a snap-shot of health. But looking at AR by insurance type or financial class will help you drill down to the components of AR and which components may be problematic. Giving staff AR days goals, will drive them in a good way. It will help staff in Two ways:
- It will establish their priorities and goals
- It will give them a more complete understanding of how AR works, and specifically how the AR they are working is performing
Putting up graphs demonstrating AR days is a great way of demonstrating performance and at the beginning of each month; staff will be crowding around new graphs to see their progress.
Motivate the staff and improve AR performance with emphasis on AR. While I may not have known it at the time, this experience helped me to see the important emphasis healthcare practice managers should put on AR days.